Under Connecticut contract law, when a buyer defaults on a residential purchase agreement that contains a liquidated damages clause, what does that clause typically allow the seller to retain?
Correct Answer
B) The earnest money deposit as the seller's sole remedy for the buyer's breach
A liquidated damages clause in a Connecticut residential purchase contract typically specifies that the earnest money deposit will be forfeited to the seller as the agreed-upon remedy if the buyer defaults. This pre-agreed amount substitutes for actual damages and is the seller's sole remedy under the clause, provided the amount is a reasonable estimate of anticipated harm and not a penalty.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
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